Answers to questions on the Affordable Care Act

Republicans like Sens. John Barrasso of Wyoming (left) and John Cornyn of Texas (center), speaking about Obamacare in Washington, hope to delay and defund key parts of the Affordable Care Act.

Republicans like Sens. John Barrasso of Wyoming (left) and John...

As state health care exchanges gear up to start enrolling people in new health insurance plans under the Affordable Care Act, I'm getting questions about the law known as Obamacare. Here are a few answers:

Q:Spencer H. writes, "I was reviewing health care plans on the Covered California site and couldn't figure out which, if any, of the plans are compatible with health savings accounts. Do you know?"

Covered California might offer them to small businesses. Contracts for the Small Business Health Options Program have not been made final.

Q:Joy H. writes, "I'm finally making myself read about Obamacare. Do you know if the deduction for self-employed health insurance will continue? I have used it for decades. I'm a one-person independent contractor. Will the new law consider me a small business or an individual? Will I have to offer myself a better plan, perhaps, to be compliant? And I hope I will still be able to deduct the health insurance premium."

As for your second question, "Self-employed persons who do not have other employees will be treated as individuals under health care reform," says Mark Luscombe, principal federal tax analyst with CCH.

"As individuals, they could, starting next year, be subject to a penalty if they do not have 'minimum essential coverage' for themselves and their dependents. If they have sufficiently small incomes, they could be eligible for a credit to help them afford coverage. They could also be eligible to seek coverage under one of the new health insurance exchanges being set up starting this fall."

Any insurance policy purchased through an exchange would be considered minimum essential coverage. Individual health policies purchased outside an exchange also should qualify, but check with the insurer to make sure.

Be aware that if you have been buying individual health insurance, your plan could change next year. "The market as a whole is being reformed, and all major medical health insurance plans will eventually be brought into compliance with the Affordable Care Act," says Carrie McLean, director of customer care with eHealthInsurance. "This will mean, for many people, better benefits and lower deductibles. It may also mean higher monthly premiums.

"Expect to hear more about what's in store from your health insurance company in the months to come, McLean says. "Some insurers will automatically transfer policyholders to health reform-compliant plans in 2014. Others may give you the option to choose a new plan for yourself. Some insurers may stop offering specific plans, forcing policyholders to reshop for new coverage in 2014."

Q:Vern, a Bay Area father, writes, "My daughter (over age 26) hasn't any income. I provide her a house and car and pay for everything. I give her a monthly allowance. What happens to her under Obamacare?

A: If your daughter's income is so low she is not required to file a federal tax return, she will not be required to buy health insurance, McLean says.

The Affordable Care Act exempts nine categories of people from the individual mandate, including those with household income below the filing threshold. (For other exemptions, and more on minimal essential coverage, see http://tinyurl.com/pon4s8x.)

Whether her insurance changes depends on what she has now. Next year, most people who fall below certain poverty levels will qualify either for Medicaid (Medi-Cal in California) or a tax subsidy for insurance purchased on an exchange.

"At first glance it would seem she is eligible for Medicaid now and in the future," says Bonnie Burns, a policy specialist with California Health Advocates.

However, under today's rules, she would not qualify for Medi-Cal as a single adult unless she was over 65, disabled, blind, pregnant or had children.

If she did meet at least one of those criteria, her income - including gifts and possibly other support she receives from her father - would have to be below a certain limit to qualify for Medi-Cal, says Rene Mollow, deputy director with the California Department of Health Care Services.

Next year, under expanded Medi-Cal, eligibility will be based only on income, and the limits will be slightly higher than they are now, Mollow says. So it's possible she could qualify as a single, childless non-elderly adult for Medi-Cal next year, if she does not today.

If she cannot get Medi-Cal next year, she might qualify for a tax subsidy for insurance purchased on an exchange.

If she is claimed as a dependent on her father's return, they will be treated as one household for purposes of determining the subsidy. If she is not claimed as a dependent, she will have to get insurance and the subsidy on her own, Mollow says.

To get the subsidy, she will need to have income, which might not include gifts and other support she is getting from her father. So it's possible the support Vern is providing could disqualify her for Medi-Cal but not qualify her for subsidized health insurance.

"This is a very unusual situation that I doubt has a straightforward answer," Burns says.

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